Stop the ETS funding coal, Start a meaningful carbon price

We, the undersigned, urgently appeal to Representatives of European Parliament, Council and the European Commission to ensure that European power and industry are put on the right track to rapidly and cost-effectively reduce their carbon emissions. The European Union was instrumental in designing the Paris Agreement. Now it must implement it. On 8th November, the aforementioned decision-makers will discuss final changes to the EU Emissions Trading System (ETS) for the post-2020 period. It is vital that these changes enable the ETS to help deliver the Paris commitments. The recently published UNEP report underlines the urgency to act now in order to ensure that the 1.5°C target remains attainable.

One important discussion topic will be the design of the ETS funds. It is crucial that ETSfunds stop subsidizing coal plants. We are glad to see that the European Parliament, as well as seven Member States, have called for ending this misuse of funds. To reach the “well below two degrees” goal agreed at Paris, the International Energy Agency’s (IEA) modelling shows that unabated coal in Europe must fall to zero by 2030: This means that the ETS must no longer fund this obsolete and polluting technology and needs to accelerate a socially just transition instead.

The second crucial topic is how to ensure a meaningful carbon price that drives decarbonisation throughout the 2020s and beyond. This can only happen if the cap on carbon emitted under the ETS continues to tighten in line with the Paris climate goals and is adjusted downwards to account for progress. Without this change, the EU carbon market will remain on an inadequate decarbonisation trajectory and risks another decade of irrelevance, leaving the EU lagging behind on green growth and innovation.

Fundamentally, the EU ETS must ensure a meaningful carbon price in line with the Paris climate goals, while at the same time stop subsidizing high-carbon intensity technologies such as coal.